Roche prices $5.75 billion offering; Thomson Reuters, Niagara also price; spreads firm

By Aleesia Forni

Virginia Beach, Sept. 22 – Roche Holding AG, Niagara Mohawk Power Corp. and Thomson Reuters were among the names pricing new investment-grade bond deals during an active day for corporate issuers.

Despite a somewhat weaker tone to the overall market, most deals that priced were met with a solid response from investors.

“Everything went over really well today,” a market source said.

In total, the high-grade bond market saw more than $9.4 billion of investment-grade paper price on Monday, well on its way to meeting expectations of $20 billion to $25 billion of supply for the week.

The highlight of the session was a $5.75 billion, six-part new issue from Roche Holding to fund its pending acquisition of biotechnology company InterMune Inc.

The deal’s order book was nearly two and a half times oversubscribed, with the fixed-rate tranches pricing around 10 bps tighter compared to initial guidance.

The high-grade primary also hosted Thomson Reuters, which sold $1 billion of senior notes in tranches due 2017 and 2024 tight of price guidance.

Details of Niagara Mohawk’s new issue were unavailable at press time.

Also on Monday, Tiffany & Co. sold a $550 million issue of senior notes in tranches due 2024 and 2044.

Old Republic International Corp. and Trinity Industries Inc. were each in the market with upsized $400 million offerings of senior notes, respectively.

American Transmission Systems Inc. also priced a $400 million offering of senior notes, pricing the new issue at the tight end of talk.

Meanwhile, Toyota Motor Credit Corp. priced $265 million of two-year floating-rate notes.

In the preferred market, Qwest Corp. priced $500 million of $25-par 40-year senior notes at par to yield 6.875% on Monday.

Looking ahead, Landwirtschaftliche Rentenbank and Kommuninvest i Sverige AB both joined the forward calendar on Monday, announcing plans to bring new bond offerings to market.

In the secondary market, investment-grade bond spreads eased on the day following tightening earlier during the session.

The Markit CDX North American Investment Grade series 22 index closed 3 basis points wider at a spread of 59 bps.

New deals from American Transmission Systems and Old Republic were quoted better in the secondary, a trader said.

Roche’s new bonds were not seen in aftermarket trading, a trader said.

Roche megadeal

Monday’s primary market saw Roche Holding price a $5.75 billion offering of notes in six parts, a market source said.

The sale included $300 million of three-year floating-rate notes priced at par to yield Libor plus 9 bps.

A second tranche was $850 million of 1.35% three-year notes sold at Treasuries plus 30 bps, or 99.982 to yield 1.356%.

A $500 million tranche of five-year floaters sold at par to yield Libor plus 34 bps.

There was also $1.5 billion 2.25% five-year notes sold at 50 bps over Treasuries. Pricing was at 99.854 to yield 2.281%.

A $1.3 billion tranche of 2.875% seven-year notes sold at 67 bps over Treasuries, or 99.723 to yield 2.919%.

Finally, $1.3 billion of 3.35% 10-year notes priced with a spread of Treasuries plus 82 bps. The notes sold at 99.747 to yield 3.38%.

All tranches sold at the tight end of talk, which had firmed around 5 bps to 10 bps from initial guidance.

The company was last in the U.S. bond market with a $16 billion sale of notes in six parts on Feb. 18, 2009.

At the time, the issue was one of the largest high-grade corporate bond issues in U.S. dollars.

Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and MUFG are the bookrunners.

Roche is a Basel, Switzerland-based drug maker.

Thomson Reuters two-parter

Thomson Reuters priced $1 billion of senior notes (Baa2/BBB+/BBB+) in two tranches due 2017 and 2024 on Monday, according to a market source and a FWP filed with the Securities and Exchange Commission.

The company sold $550 million of 1.65% notes due 2017 at Treasuries plus 65 bps. Pricing was at 99.828 to yield 1.709%.

The notes sold tighter than guidance, which was set at Treasuries plus 75 bps to 80 bps.

A second tranche was $450 million of 3.85% 10-year notes sold at 99.466 to yield 3.915%, or Treasuries plus 135 bps.

The notes sold tighter than guidance in the Treasuries plus 150 bps area.

Deutsche Bank Securities Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC and RBS Securities Inc. were the bookrunners.

Proceeds will be used for general corporate purposes.

The multinational media and information company is based in New York City.

Tiffany new issue

Also on Monday, Tiffany priced $550 million of senior notes in tranches due 2024 and 2044, according to a company news release.

The company priced $250 million of 3.8% senior notes due Oct. 1, 2024 and $300 million of 4.9% bonds due Oct. 1, 2044.

BofA Merrill Lynch, Goldman Sachs & Co., BNY Mellon Capital Markets LLC, JPMorgan and Mizuho Securities were the bookrunners.

Proceeds will be used to redeem $100 million of the company’s 9.05% series A senior notes due Dec. 23, 2015, $125 million of its 10% series A-2009 senior notes due Feb. 13, 2017, $50 million of its 10% series A senior notes due April 9, 2018 and $125 million of its 10% series B-2009 senior notes due Feb. 13, 2019.

Remaining proceeds will be used for general corporate purposes.

The sale was done via Rule 144A and Regulation S.

American Transmission prices

The session also saw American Transmission Systems sell $400 million of 5% senior notes due 2044 with a spread of Treasuries plus 178 bps, an informed source said.

The notes (Baa2/BBB-/) sold at the tight end of guidance, which was set in the Treasuries plus 180 bps area.

Pricing was at 99.007 to yield 5.065%.

A trader quoted the notes 2 bps better in the secondary at 178 bps bid, 176 bps offered.

RBC Capital Markets LLC, RBS Securities and U.S. Bancorp Investments Inc. were the bookrunners for the Rule 144A and Regulation S deal.

The provider of transmission services is based in Akron, Ohio.

Old Republic upsizes

Old Republic International sold an upsized $400 million of 4.875% senior notes (Baa3/BBB+/) due 2024 on Monday at Treasuries plus 237.5 bps, according to market sources.

Old Republic upped the deal’s size from $300 million.

Pricing was at 99.498 to yield 4.939%.

A trader quoted the 4.875% 10-year notes at 237 bps bid.

Morgan Stanley and Credit Suisse Securities were the bookrunners.

Proceeds will be used for general corporate purposes.

Chicago-based Old Republic is an insurance holding company.

Trinity brings 10-years

Trinity Industries also upsized its new issue on Monday, selling $400 million of 4.55% senior notes due 2024 with a spread of Treasuries plus 200 bps, according to an informed source and a FWP filed with the SEC.

The issue’s size was increased from $300 million.

The notes (Ba1/BBB-/BBB-) sold at the wide end of guidance, set at Treasuries plus 187.5 bps to 200 bps.

Pricing was at 99.888 to yield 4.564%.

BofA Merrill Lynch and JPMorgan were the bookrunners.

Proceeds will be used for general corporate purposes.

The Dallas-based company manufactures transportation, construction and industrial products.

Toyota sells floaters

Toyota Motor Credit (Aa3/AA-/) sold $265 million of two-year floating-rate medium-term notes, series B, on Monday at par to yield Federal Funds rate plus 25 bps, according to a FWP filed with the SEC.

Morgan Stanley was the agent.

The funding arm of auto manufacturer Toyota is based in Torrance, Calif.

Qwest offers preferreds

Qwest priced $500 million of $25-par 40-year senior notes (expected ratings: Baa3/BBB-/BBB-) at par to yield 6.875% on Monday, according to a market source.

BofA Merrill Lynch, Morgan Stanley, UBS Securities LLC and Wells Fargo Securities LLC are the bookrunners.

Interest is payable on a quarterly basis. The notes become callable Oct. 1, 2019 at par plus accrued interest.

Proceeds will be used to help retire $600 million of 7.5% notes plus $23 million of interest.

Qwest is a Monroe, La.-based telecommunications provider.

Rentenbank eyes seven-years

Landwirtschaftliche Rentenbank is expected to price an offering of notes due 2021, according to a 424B5 filed with the SEC.

JPMorgan, Morgan Stanley, Nomura and RBC Capital Markets are managing the sale.

Proceeds will be used to finance lending activities.

The German development agency for agribusiness is based in Frankfurt.

Kommuninvest sets talk

In other forward calendar news, Kommuninvest i Sverige set price talk for a planned offering of five-year notes (Aaa/AAA/AAA) in the mid-swaps plus 5 bps area, an informed source said.

BofA Merrill Lynch, JPMorgan, Nomura and Skandinaviska Enskilda Banken AB are the bookrunners for the Rule 144A and Regulation S deal.

Kommuninvest offers funding to municipalities of Sweden and is based in Orebro.

Bank/brokerage CDS costs rise

Investment-grade bank and brokerage CDS prices rose on Monday, according to a market source.

Bank of America Corp.’s CDS costs increased 3 bps to 64 bps bid, 69 bps offered. Citigroup Inc.’s CDS costs were 3 bp higher at 62 bps bid, 67 bps offered. JPMorgan Chase & Co.’s CDS costs increased 2 bps to 53 bps bid, 56 bps offered. Wells Fargo & Co.’s CDS costs ended 2 bps higher 40 bps bid, 45 bps offered.

Merrill Lynch’s CDS costs were 3 bps higher at 67 bps bid, 71 bps offered. Morgan Stanley’s CDS costs ended 3 bps higher at 73 bps bid, 77 bps offered. Goldman Sachs Group, Inc.’s CDS costs increased 3 bps to 76 bps bid, 79 bps offered.

Paul Deckelman contributed to this review

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.